XIII. INVITED INTERNATIONAL

Trade Unions under Bargained Corporatism: The Case of Ireland

PATRICK GUNNIGLE AND MICHELLE O'SULLIVAN
University of Limerick

Abstract

      This paper seeks to explore the current role of trade unions in Ireland by examining recent research evidence in the areas of trade union density, trade union recognition, and trade union influence. We conclude that despite almost 14 years of national level accords among the social partners, there is evidence of extensive employer resistance to trade unions and of a significant decline in union penetration in many sectors of the economy. These findings, we argue, raise important paradoxes between espoused government policy, which appears to support a strong trade union role in industry, and actual practice, which encourages the attraction of start-up industries which actively avoid trade union recognition. Some of the reasons for this phenomenon are also explored.

Introduction

      The Republic of Ireland has undergone an extraordinary economic transformation over the past decade. Locked in a recessionary spiral, the country faced effective economic bankruptcy in the late 1980s. However, its economic performance since then has been nothing short of remarkable. It is now the OECD's fastest growing economy: GDP increases have averaged between 9 percent and 10 percent per year since 1994, and unemployment has fallen from a high of almost 20 percent in the mid-1980s to its current level of just over 3 percent (Economist Intelligence Unit 2000). In terms of international competitiveness, the World Competitiveness Yearbook 2000 ranks Ireland as the 7th most competitive world economy (up from 11th in 1998 and 15th in 1997; International Institute for Management Development 2000). This performance has earned the country the label of "Celtic Tiger" following a bullish Euroletter on the Irish economy from the U.S. investment bank Morgan Stanley in 1994 (O'Hearn 1998).

      Industrial relations has played a significant role in the Irish success story. Since 1986 a series of centrally negotiated accords were agreed upon by the social partners (principally government, employers and trade unions). The most recent agreement--the Programme for Prosperity and Fairness (PPF)is due to expire in 2003. These agreements deal not only with pay but with a range of economic and social policy issues such as welfare provision, employment creation and tax reform. They have given the trade union movement (through the Irish Congress of Trade Unions) a pivotal role in shaping economic and social policy.

      Thus, it is often widely suggested that the position of organized labor in Irish society is significant and enduring. The Irish experience is seen as contrasting that of the UK and United States, where the election of conservative governments with strong anti-labor agendas meant that the 1980s and much of the 1990s was characterized by a hostile political climate for unions. Indeed, an anti-union public policy agenda in the UK and the United States was seen as an important factor contributing to the decline in trade union membership and influence, and in the coverage of collective bargaining during that period (Beaumont and Harris 1994; Kochan et al. 1986; Sparrow and Hiltrop 1994).

      Public policy in Ireland followed a very different and apparently more benign route. The most widely touted explanation for Irish "exceptionalism" relates to the socio-political context which, it is argued, remains conducive to a strong collectivist orientation in industrial relations (Roche and Turner 1994). Critical aspects of this "supportive" context include a long tradition of accepting the legitimacy of organized labor and the absence of an anti-union agenda among any of the country's political parties.

      This paper seeks to explore the current role of trade unions in Ireland by examining recent research evidence in the areas of trade union density, trade union recognition, and trade union influence. We conclude that despite almost 14 years of national level accords among the social partners, there is evidence of extensive employer resistance to trade unions and of a significant decline in union penetration in many sectors of the economy. These findings, we argue, raise important paradoxes between espoused Government policy, which appears to support a strong trade union role in industry, and actual practice, which encourages the attraction of start-up industries which actively avoid trade union recognition. Some of the reasons for this phenomenon are also explored.

Trade Union Density

      As many commentators have noted, industrial relations in Ireland have traditionally been associated with a strong pluralist orientation. (See, for example, Gunnigle and Morley 1993; Roche 1997). Indeed, despite Ireland's relatively recent industrialization, organized labor has long played a prominent role in Irish history, with trade unions well established in many industries by the early 1900s. Thus, pluralist industrial relations traditions are well ingrained in our national psyche and traditionally evident in comparatively high levels of union penetration, a reliance on adversarial collective bargaining and industrial relations as a key management activity in most medium and larger organizations.

      In keeping with such pluralist traditions, Ireland has traditionally been characterized by reasonably high levels of trade union density. As illustrated in Figure 1, trade union membership increased, more or less progressively, from the 1930s right up to 1980. We then witnessed a significant decline in membership between 1980 and 1988. This decline in union membership is principally attributed to macroeconomic factors, particularly economic depression, increased unemployment and changes in employment structure involving decline/stagnation of employment in traditionally highly unionized sectors and growth in sectors traditionally more union averse, such as private services and areas of "high technology" manufacturing (Roche and Ashmore 2000).

      Looking at more recent trends we find an increase in union membership in the period 1990–1999, a trend which clearly reflects increased employment levels over the period.

However, if we consider trends in union density, the picture is not so sanguine for trade unions. Using the most recent available statistics, our calculations indicate that in 1999 employment density was 44.5 percent and workforce density 38.5 percent (see Table 1). This represents a fall in employment density of almost 10 percent since 1994 in a period when the numbers at work increased by one third.

Historically, employment growth has positively impacted on trade union density in Ireland. Clearly this is not the case for the boom years of the 1990s and represents a worrying trend in regard to trade union density in Ireland. Taking a longer-term perspective, our data indicate that employment density has fallen by a staggering 17 percent since the high point of 1980 (when employment density reached 62 percent).

Trade Union Membership at Organization Level

      While national statistics provide us with an overall picture of trade union density, it is necessary to look at union membership level at organization level to gain insights into the operational role and impact of trade unions. The Cranfield– University of Limerick (CUL) Study conducted in 1992, 1995 and 1999 investigated industrial relations practices in large Irish organizations. In this study, respondents were asked to indicate the proportion of the workforce in their organization that was in membership of a trade union. These findings are summarized in Figure 2. If we take a point-in-time perspective, one might argue that the figures indicate that union density levels among larger organizations in Ireland are reasonably high: in 1999 over half the organizations reported that 50 percent or more of their employees were trade union members. However, if we look at the trend in regard to union density we find a pattern of progressive decline. In the first survey (1992), two-thirds of organizations reported that 50 percent or more of their workforce were trade union members; by 1999 this had fallen by some 13 percent.

      As in the previous phases of the CUL survey, the 1999 data reveal that levels of union density remain particularly high in the public sector. The difference in union density is clearly outlined in Figure 3, which compares union membership levels in private and state/semi-state organizations. While only a small fraction of state or semi-state organizations report low or zero levels of union membership, some 40 percent of private companies report no union members, with a further 20 percent reporting membership levels of 50 percent or less. In contrast state or semi-state companies account for by far the greatest proportion of highly unionized organizations. Eight in ten public-sector companies reported union membership levels of between 76 and 100 percent; the equivalent private-sector figure was just two in ten.

Trade Union Recognition

      Trade union recognition represents a critical barometer of "collectivism" in industrial relations. This is particularly the case in Ireland, which has no mandatory legal procedure for dealing with union recognition claims. Thus the granting of recognition remains largely an issue to be worked out voluntarily between employers and trade unions. In addition to data on trade union density, trends on union recognition thus provide another important indication of trade union penetration.

      Turning to empirical evidence, data from the 1999 Cranfield– University of Limerick (CUL) Study finds what at first might seem a reasonably healthy picture of trade union recognition in Ireland. In the 1999 survey, some 69 percent of participating organizations recognized trade unions for collective bargaining purposes. However, when we look at the trend in regard to trade union recognition, we find that the proportion of organizations which recognize trade unions fell from 83 percent in the first survey (1992) to the current level of 69 percent, a fall of 14 percent over a 7-year period. We should also add the important caveat that the CUL study covers only larger organizations. However, much of Ireland's business activity takes place among small firms employing less than fifty workers. It is well established in the literature that union penetration is lower in smaller organizations; consequently, union recognition in the small-firm sector is likely to come in well below the CUL figures presented in Table 2. (See Goss 1991; Gunnigle and Brady 1984; McMahon 1996.)

      By and large, the national statistics and data from the CUL study present a mixed picture on trade union penetration in Ireland. Looking at trends in regard to aggregate levels of trade union density we find a picture of steady decline since 1980. A similar picture emerges from our review of trade union membership levels within organizations. However, our data also indicate that most larger organizations are characterized by reasonably high levels of union penetration. At face value, this evidence might lead one to conclude that there is a high level of congruity between public policy--seen as supporting the institutions of trade unions and collective bargaining--and actual practice, whereby the Irish trade union movement plays a key role in both national level and enterprise level industrial relations. To better inform our understanding of trade union penetration in Irish industry, it is necessary to consider additional sources of data. Below we consider one such source, namely data on trade union recognition in new greenfield firms.

      This data is based on a study of a representative sample of firms in the manufacturing and internationally traded services sectors, which established at greenfield sites over a 10-year period (1987–1997). The study excluded firms with less than 100 employees and used qualitative semi-structured interviews with senior managers and statistical analysis of a questionnaire based survey completed by the senior manager responsible for industrial relations. (See Gunnigle 1995; Gunnigle, Turner and D'Art 1998.) The dataset was gathered in two distinct phases: phase one covered all qualifying greenfield site firms established in the period 1987 to mid-1992, while phase two covered a representative sample of greenfield firms established in the period mid-1992 to 1997. Altogether, the greenfield site dataset draws on information from 76 greenfield firms (62 percent of qualifying firms over the total period, 1987– 1997). Of the total, forty four (58 percent) were U.S.-owned with the remainder comprising of thirteen Irish (17 percent), ten European (13 percent), and nine (12 percent) "other" foreign-owned firms. These seventy-six firms employed some 22,900 workers at the time of investigation. As one might expect, there was a concentration of firms in "high-technology" sectors, with the largest numbers in office/data processing equipment manufacture and in software.

      Given the profile of the greenfield site population and, particularly, the prevalence of both U.S. and "high-technology" firms, one would anticipate a high incidence of non-union firms. As can be seen from Figure 4, this was certainly the case, with over two-thirds (65 percent) of firms not recognizing trade unions. This evidence is indicative of significant growth in union avoidance among large greenfield start-ups in Ireland. Given that the incidence of non-union approaches was significantly higher in the (second) phase of the study than in the first, the findings also reflect the progressive diminution of union penetration in greenfield firms over the period. (Ninety-one percent of firms were non-union in the second phase, while the corresponding figure for the first phase was 53 percent.) Non-unionism is clearly most prevalent amongst subsidiaries of U.S. multinational in the "high-tech" sector.

      If we look more generally at the longitudinal pattern of union recognition in large greenfield sites, we find that non-union approaches began to take off in the early 1980s, became significantly more commonplace as the decade progressed and are now characteristic of the great majority of greenfield site firms in the manufacturing and internationally traded services sector (Gunnigle 1995; Gunnigle, MacCurtain and Morley 2001). While the early non-union firms were predominantly U.S.-owned and located in "high-tech" firms (mostly electronics, software and internationally traded services), our more recent evidence from the early 1990s points to the broader diffusion of union avoidance to embrace both Irish and other foreign owned firms. It is all the more revealing that this decline in union penetration in new firms has occurred during an era when the trade union movement has exerted significant influence in the shaping of economic and social policy and when economic growth and employment creation have been exceptionally high.

Discussion

      In our introduction we noted the contrast between the industrial relations trajectories of Ireland and those of the UK and the United States from the early 1980s where, in the latter, trade unions had to face a quite hostile political and legal environment. In Ireland, however, the trade union movement has become a key actor in shaping economic and social policy in its role as a "social partner". These developments might lead one to believe that Ireland provides an example of a social, political and economic context conducive to the sustenance of both a strong trade union role in society and of pluralist industrial relations traditions. However, this has demonstrably not being the case.

      In first looking at the issue of trade union membership, we find a picture of steady decline since the turn of the 1980s. In regard to trade union recognition, there is conclusive evidence of extensive union avoidance among larger manufacturing and internationally traded service companies, which have established at greenfield sites. Many of these companies are U.S.-owned and located in high-technology sectors. It is likely that this trend will be accentuated by the increasing numbers and visibility of companies successfully pursuing the non-union route which, in turn, provide useful models for new organizations considering establishing on a non-union basis. This development points to an element of contradiction between public policy support for trade unions and a state-sponsored pattern of industrial development which is significantly union averse. The encouragement of foreign direct investment is a critical aspect of Irish public (industrial) policy. The Irish economy is significantly more reliant on multinational investment than any other EU nation. Employment in foreign-owned multinational corporations (MNCs) now accounts for roughly one-third of the industrial workforce. These foreign owned companies account for 55 percent of manufactured output and some 70 percent of industrial exports (Tansey 1998). U.S.-owned firms have a particularly strong presence in Ireland: a result of our overwhelming success in attracting U.S. multinational investment. In 1997, the Economist estimated that Ireland attracted close to a quarter of all available U.S. manufacturing investments in Europe and some 14 percent of all direct foreign investment locating in Europe (1997). These are remarkable statistics given that Ireland accounts for just 1 percent of the EU's population. It also seems the locus of much recent industrial development has been in sectors that are quite hostile to trade unions, particularly the computer/electronics, software and teleservices sectors.

      These findings raise important paradoxes between espoused public policy, which supports a strong trade union role in industry, and actual practice, which contributes to an ongoing diminution in the role of organized labor. The reasons for this change stem less from any ideological change but rather from Ireland's vulnerable position as a very open, export-oriented economy that is heavily reliant on foreign direct investment (FDI). In an increasingly competitive market for the attraction and retention of foreign investment, Irish industrial policy has adopted the practice of portraying Ireland as a "union neutral" environment. This public policy stance emanates largely from a desire for Ireland to be characterized as a "new" economy: pro-business and enterprise, and an attractive site for multinational investment. Indeed, it appears that FDI has become a major factor impacting on public policy decisions in the sphere of industry and industrial relations. Indeed, Ireland's current public policy approach in the industrial relations arena seems largely determined by pragmatism and dependence on FDI. Thus trade unions in Ireland, while playing an influential role at national level, appear to face much the same challenges at enterprise level as unions in other developed countries, some of which have experienced a more overtly hostile public policy climate. Indeed, it would appear that public policy has done little to promote union penetration but has rather overseen a progressive decline in union influence and Ireland's succession to a neo-liberal economy. This is very much in line with Hyman's (1999:93) more general observation on the international scene that "after two decades in which the superior performance of such ‘institutionalised economies' as Germany and Japan was widely recognised, the conventional wisdom of the 1990s has been that dense social regulation involves rigidities requiring a shift to market liberalism". Trade unions are often seen, most particularly by U.S. firms, as key contributors to excessive labor market "rigidities". Ireland has been to the fore in promoting an economic context in which firms, particularly U.S.-owned firms, can conduct their business free from such rigidities. This has been a key factor in contributing to the decline in trade union density, recognition and influence at enterprise level in Ireland.

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